M/S Jcc Infraprojects PVT. LTD. vs. Union Of INDIA Through General Manager, North Western Railway

Held

The Court held that the arbitration application was not maintainable and was dismissed. Regarding Issue 1, the Court found that the applicant's claim of coercion and duress regarding the 'No Claim Certificate' was not bonafide, as it was raised belatedly in the rejoinder after more than three years. The Court noted that the applicant had consistently raised only the GST neutralization claim for over a year and a half after submitting the certificate. The claim amount of approximately Rs. 14 Crore was significantly more than 20% of the tender amount (Rs. 21,69,63,087.73), making it fall under the 'exception clause' as per Clause 41(7)(i) of the Special Conditions of Contract, rendering it non-arbitrable. Clause 43(2) of the General Conditions of Contract also debars contractors from disputing matters covered by a 'No Claim' Certificate. Regarding Issue 2, the Court observed that the applicant had not made a demand for arbitration under Clause 64(1)(i) of the General Conditions of Contract, nor had they specified the disputed matters and claim amounts item-wise. The Court concluded that the matter fell under the 'excepted matters' as defined in Clause 63, due to the submission of the 'No Claim Certificate' and the belated raising of a dispute exceeding 20% of the tender value.

Facts

M/s JCC Infraprojects Pvt. Ltd. (applicant) was awarded a construction contract by North Western Railway (respondent). The applicant contended that due to the respondent's failure to perform reciprocal promises, the contract timeline was extended, causing significant losses. The applicant also sought neutralization of GST impact. The Railways rejected this claim. The applicant filed an arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The respondent argued that no notice under Section 21 of the Act was given, the claim exceeded 20% of the contract value, and was therefore not arbitrable as per an 'exception clause'. The respondent also pointed to a 'No Claim Certificate' submitted by the applicant.

Key Issues

1. Whether the dispute concerning the neutralization of GST impact and other claims is arbitrable, considering the 'No Claim Certificate' submitted by the applicant and the provisions of the contract, particularly Clause 41(7)(i) of the Special Conditions of Contract and Clause 43(2) of the General Conditions of Contract? (Question of law) 2. Whether the applicant has fulfilled the procedural requirements for demanding arbitration under Clause 64(1)(i) of the General Conditions of Contract, specifically regarding the specification of disputed matters and claim amounts? (Question of law) Petitioner's arguments: The applicant contended that the 'No Claim Certificate' was submitted under coercion and duress. They also argued that when raising the final bill, they specifically mentioned that the claim did not include GST neutralization. They relied on R.L. Kalathia & Co. Versus State of Gujarat, BPR Infrastructure Limited Versus Rites Ltd., Bharat Coking Coal Ltd. Versus Annapurna Construction, M/s. Pandit Construction Company Versus Delhi Development Authority & Anr., and M/s. PNC Infratech Ltd. & Anr. Versus Union of India & Ors. Respondent's arguments: The respondent argued that the applicant failed to issue a notice under Section 21 of the Act. They contended that the claim, exceeding 20% of the contract value, was not covered under the agreement and fell under an 'exception clause'. The respondent also argued that the 'No Claim Certificate' barred the applicant from raising disputes, and the claim raised after a significant delay and exceeding the contract value was not arbitrable. They highlighted the substantial increase in the claim amount from Rs. 11,47,890/- to approximately Rs. 8 Crore (later Rs. 14 Crore with interest) after signing the certificate.